Monday, 3 April 2017

Is access to justice really out of reach for most employee's?




The Guardian’s article “Access to justice is no longer a worker’s right but a luxury” provides an illustration of the difficulties faced by one individual who faced discrimination at work.


On the face of it the lady concerned did not appear to be very well off but she was unable to obtain help with employment tribunal fees and in the event relied on her trade union together with crowd-funding to cover her legal costs and the tribunal fees.  Her case was settled and she was spared attending a hearing. 

We have blogged about the introduction of employment tribunal fees from time to time and this story serves as a reminder of the need for legal protection for individuals. BTE is more valuable than ever since the introduction of fees.

Following its review of employment tribunal fees the Government has confirmed that they have no intention of reducing the level of fees payable (£1200 for most claims that result in a hearing).

The story, however, does not paint the full picture.  It gives the impression that employment tribunal cases are scarce as fees deter individuals from pursuing their rights. While it’s true that claims against businesses have dropped since the introduction of fees the latest quarterly statistics – Q4 2016, show a 3% increase in the number of single tribunal applications received over the same quarter in 2015.


More importantly around 92,000 notifications of disputes were received by ACAS’s early resolution service in the year to March 2016.  The early conciliation service is free to both employers and employees and ARAG provides legal representation throughout the process for our commercial and family policyholders.  Parties are successful in arriving at an agreement through ACAS Early Conciliation in around one-third of cases and can avoid their claim escalating to tribunal.



Reforming the Soft Tissue Injury (‘whiplash’) Claims Process – A point of view


From its publication in November 2016, the Government’s consultation “Reforming the Soft Tissue Injury (‘whiplash’) Claims Process” provoked much commentary from insurers and professionals who work with personal injury claims. The consultation included 31 questions and for good measure the Ministry of Justice published an accompanying Impact Assessment which raised a further 40-odd questions/calls for data and information. The closing date of 6th January drew much criticism as the pressure was on stakeholders to respond so shortly after the Christmas break.

On 17 January the Financial Secretary to the Treasury announced, in advance of the Government releasing its response to the consultation, that legislation would be started “later this month”.  This is bound to reinforce the general perception that the reforms are a “done deal” irrespective of the views of respondents. 

What’s the problem?   
Despite a reduction in motor personal injury claims in recent years the Government remains concerned about the number and cost of road traffic accident (RTA) related low value soft tissue injury (‘whiplash’) claims. The Government maintains that many whiplash claims are exaggerated or fraudulent, and wishes to reduce the impact (the Association of British Insurers says) this has on motor insurance premiums. The Government believes the amount of compensation currently paid to claimants for these claims is out of all proportion to the level of injury suffered and wishes to reduce the cost of defending the claims and sums of compensation payable to injured parties for Pain Suffering and Loss of Amenity (PSLA). The consultation seeks feedback in response to a raft of measures aimed at reducing motor insurance premium by an average of £40 a year. (it’s such a shame that almost in the same breath the Treasury imposed a further 2% increase in IPT).

The proposed reforms
The consultation questions focused on the following proposals:

·         The removal of compensation for pain, suffering and loss of amenity (PSLA) for minor whiplash
-   entirely or
-   replace by a fixed sum - £400 or £425 where psychological injury forms part of the claim.
·            Other measures
-   To introduce a tariff of payments for PSLA in more significant claims,
-   To raise the small claims court limit to £5,000 making legal costs unrecoverable,
-   To ban settlement of whiplash claims without a medical report from an accredited expert.
·       Views were also sought on related issues such as credit hire, early notification forms, rehab,   and recoverability of disbursements.

Our response
Ø  Damages

In our view it is inconceivable that injured parties in a traffic accident should lose their right to be compensated while those who suffer inconvenience with much shorter term effects (e.g. due to flight or rail delays) are considered more deserving.
With regard to the level of compensation, we cannot understand how £400 was arrived at given that the current Judicial College Guidelines (JCG) determine a median average figure of £1800.   It is our view that victim's compensation should be determined according to the degree of pain, extent of soft tissue damage and the claimant's expected recovery time – not merely the latter.  The JGC (currently edition 13) allow the courts to determine a fair level of damages, and it is unacceptable that the Government should seek to impose a fixed sum on such an arbitrary basis.

For injuries that exceed a duration of six months a tariff of damages is proposed which represent between 22% and 82% of (out of date) JCG figures. It is further suggested that there may be a 20% uplift to the proposed tariff in exceptional circumstances. In addition to seeking an explanation of why the consultation relies on out of date figures we would take issue with the figures proposed whether or not a discretionary uplift is available since the JCG already provides flexibility for courts to determine suitable levels of damages.

The consultation seeks views about whether, (if it should remain possible to seek compensation for pain, suffering and loss of amenity) the “diagnosis” or “prognosis” approach should apply. The former requires claimants to wait for six months before bringing their claim and the consultation acknowledges that the delay will act as a disincentive to the majority of claimants who have genuine injuries.  Our consultation response listed a further five disadvantageous impacts – to all parties -  of adopting such an approach.  It is incumbent upon insurers to investigate and prosecute fraudulent claims, rather than to rely on the Diagnosis approach which would be unfairly detrimental for genuine claimants.

Ø  Raising the small claims court limit

The Government asserts that the small claims track limit will be increased to £5,000.  As the limit was set over 25 years ago it is not unreasonable to consider whether it should be increased, however the certainty of this statement casts doubt on the authenticity of the consultation. The effect of inflation since the last increase produces an index-linked figure in the region of £2,000.  Increasing the small claims track limit to £5,000 will result in 93% of claims that are currently pursued with the help of a lawyer being pursued without legal representation or not at all.

In 2013 the "Transport Committee's fourth report on the cost of motor insurance: whiplash" concluded that;
·         access to justice is likely to be impaired, particularly for people who do not feel
confident to represent themselves and
·         use of the small claims procedure could prove counterproductive in efforts to discourage fraudulent and exaggerated claims and
·         that the proposed reform could create new opportunities for claims management companies.

Ø  Litigants in person

The consultation goes on to seek views on suggested improvements that could be made to provide help to litigants in person and any specific measures that might be introduced in relation to claims management companies and McKenzie friends operating in the personal injury sector.

The expectation that individuals would have the capacity, confidence or appetite to instigate claims following the trauma of an accident is unrealistic. There will clearly be an inequality of arms with genuine claimants viewing the portal (or similar digital system) as a significant barrier to bringing a claim. Vulnerable customers, those for whom English is a second language and anyone falling the wrong side of the “digital divide” will be most adversely affected and therefore an equal opportunities impact assessment must be undertaken.

We are not aware of any work having been undertaken to assess how easily individuals are able to understand the required procedures and engage with the process. The Government does not appear to have based its views on consumer evidence (such as that gathered from focus groups or consumer questionnaires) to gauge how confident potential victims feel about pursuing claims in person. More work should be carried out to properly evaluate how well individuals are able to manage the process.

In our view unqualified and unregulated McKenzie Friends and unqualified CMCs should be banned.
It is widely held that CMCs are to blame for much mischief in the market. Cold-calling activities and mis-use of personal data has created an unpleasant environment for both consumers and insurers.  The idea that the Government should encourage the use of CMCs and paid McKenzie friends is abhorrent.

Ø  Pre-medical offers

The consultation seeks views about imposing a ban on pre-medical offers and asks respondents whether this should apply to all injury claims or just RTA cases.  We support an entire ban. Pre-medical offers fuel the fraud and exaggeration that insurers complain about. Enforcement of the ban could be by the introduction of regulatory or criminal sanctions or designing a mandatory field into the claims notification form to record key information from the claimant’s medical report. Recording the source of referral of claims will shine a light on pockets of fraudulent activity by CMCs.

Ø  Credit car hire

There is a clutch of questions about credit car hire with descriptions of various “models” that describe which party provides and controls provision of a replacement vehicle. Our preference is for the “Industry Code of Conduct” option which thanks to the ABI GTA is basically what we already have. Additionally, insurers already have the opportunity to limit the extent to which their policies will pay for hire charges by drafting suitable limitations into their terms and conditions.    


Ø  Introducing time restrictions

The Government believes that “late claims” (not clear what is meant by this) are more likely to be exaggerated and seeks views on introducing a system of early notification with claimants having a limited period during which to obtain their medical examination. Besides not understanding what is meant by “late claims” we are not aware of any evidence being available to support a correlation       between the time taken to report a claim and fraud. The onus remains with the insurer to identify and challenge fraudulent claims.

Reducing the limitation period to one year for all motor personal injury claims would be an effective brake on CMCs (and paid McKenzie friends) engaging in claims fishing activities and in its 2013-14 third session report "Cost of motor insurance: whiplash" the Transport Select Committee recommend that "the Government explain the rationale for the three-year limitation period and bring forward recommendations for reducing it".

With regard to imposing a time limit for medicals, this could be positive for genuinely injured claimants. Further work should be carried out to study the behaviour of injured claimants to determine a reasonable window of opportunity following the accident during which medical help is sought before a time limit is set.


Ø  Rehabilitation

We refute suggestions that insurers are disadvantaged by mischief arising from the provision of rehabilitation services. Practitioners are bound by their own professional rules of conduct. There is already a Rehabilitation Code in force for many years agreed by both Claimant solicitors and Defendant Solicitors and insurers. This Code is working perfectly well already so there is no need to consider other options.

Ø  Impact assessment questions
Due to the very tight closing date on the consultation we were unable to provide data and responses for all of the questions and due to the length of this article we are not proposing to cover in any depth our responses here.
In summary, if the proposals are introduced, claimants will face higher BTE premiums – possibly in the region of £15 per vehicle as the costs of pursing claims will increase. This will leave many more accident victims under a reformed system uninsured for legal costs and unable to access justice.
We have challenged data supplied by the NHS Litigation Authority and main assumptions used for BTE and non-BTE claimants.
We struggle to understand how insurers will be able to discretely identify the savings from these reforms in isolation from all the other many variables that affect the pricing of premiums. We believe any savings will be “lost” in the various moving parts that make up pricing.  Secondly, we very much doubt whether Insurers will be true to their word given their poor experience of honouring past commitments. The insurance industry promised savings of £90 per motorist pre-LASPOA yet premiums have since risen by 4% despite 6% fewer claims.

These proposals will reduce the availability and increase the cost to injured victims of ATE insurance. ATE policyholders have a high proportion of low socio-economic citizens who cannot afford the alternative BTE products sold as add-ons to Motor and Household insurance products. It will be particularly damaging for non-RTA injury victims where claims are far more complex and variable.  The proposals will result in achieving the exact opposite of advancing equality of opportunity for victims who are currently vulnerable and the most disadvantaged part of society.


 


Tuesday, 28 March 2017

A consultation on arrangements concerning personal injury claims in England and Wales Summary.

Reforming the Soft Tissue Injury (‘whiplash’) Claims Process



Response from ARAG plc



Introduction

ARAG plc is a leading legal expenses insurance provider in the UK.  We are part of ARAG SE, a global leader in legal expenses insurance which generates annual premium income in excess of €1.5 billion. It has always been our vision to enable everyone, not just those who can afford it, to assert their legal rights. With this in mind we provide innovative and affordable Before the Event (BTE) and After the Event (ATE) legal expenses insurance products to consumers and businesses. 

In particular we insure 665,000 private motorists on whose behalf we pursue 31,500 personal injury claims a year. 


Consultation responses from ARAG plc.

Question 1: Should the (above) definition be used to identify the claims to be affected by changes to the level of compensation paid for pain, suffering and loss of amenity from minor road traffic accident related soft tissue injury claims, and the introduction of a fixed tariff of proportionate compensation payments for all other such claims?
Please give your reasons why, and any alternative definition that should be considered.

We agree with the suggested wording for the definition (which appears in paragraph 23, not paragraph 17) by which to identify claims for the purpose of potential reforms which may be introduced pending the outcome of this consultation.

Question 2: Should the (above) definition be extended to include psychological trauma claims, where the psychological element is the primary element of a minor road traffic accident related soft tissue injury claim?
Please provide further information in support of your answer, including if relevant, how this definition could be amended to effectively capture this classification of claim.

No, we do not agree that the suggested definition should be extended. Psychological trauma claims cannot be properly categorised in the same way as a soft tissue injury.

Question 3: The government is bringing forward two options to reduce or remove the amount of compensation for pain, suffering and loss of amenity from minor road traffic accident related soft tissue injury claims.  Should the scope of minor injury be defined as duration of six months or less?

Please explain your reasons, along with any alternative suggestions for defining the scope.

It is our view that victim's compensation should be determined according to the degree of pain, extent of soft tissue damage and the claimant's expected recovery time – not  merely the latter; so that a claimant experiencing severe pain should not be compensated at the same level as another experiencing lesser pain where both have a recovery period of six months.  Our preference for an alternative proposal would be to refer to the Judicial College Guidelines for the assessment of general damages (currently edition 13) (JCG). It is for the courts to determine a just and fair level of damages, not the Government.

Question 4: Alternatively, should the government consider applying these reforms to claims covering nine months’ duration or less?

Please explain your reasons along with any alternative suggestions for defining the scope.

For the reason stated in our response to question 3 we do not support the measures under consideration being applied to claims covering nine months. An injury that lasts up to nine months is a relatively serious injury.  

Question 5: Please give your views on whether compensation for pain, suffering and loss of amenity should be removed for minor claims as defined in Part 1 of this consultation? Please explain your reasons.

We disagree that compensation for pain; suffering and loss of amenity should be removed for minor claims as defined in Part 1 of the consultation. Individuals who have suffered injuries that adversely affect their daily lives, due to the fault of a negligent third party, must be entitled to compensation. It is inconceivable that injured parties in a traffic accident should lose their right to be compensated while those who suffer inconvenience with much shorter term effects (e.g. due to flight or rail delays) are considered more deserving.



Justice demands that the emphasis should be on assisting innocent injured victims and not minimising costs incurred by a negligent driver's insurer. The fundamental right to obtain financial compensation for bodily injury is enshrined in English common law and dates back to Anglo-Saxon times.
 
Question 6: Please give your views on whether a fixed sum should be introduced to cover minor claims as defined in Part 1 of this consultation?    Please explain your reasons.

There is no need to introduce an "arbitrary" figure as JCG (Edition 13) work well to arrive at reasonable levels of compensation. Insurers do not require certainty on a case-by-case basis as losses are pooled allowing decisions about settlement offers, reserving and pricing to be made on the basis of large numbers.

Question 7: Please give your views on the government’s proposal to fix the amount of compensation for pain, suffering and loss of amenity for minor claims at £400 and at £425 if the claim contains a psychological element.    Please explain your reasons.

We are at a loss to understand why such low amounts are being proposed and how the figures of £400 and £425 have been calculated given that the current median JCG average is calculated to be £1800.

Question 8: If the option to remove compensation for pain, suffering and loss of amenity from minor road traffic accident related soft tissue injury claims is pursued, please give your views on whether the ‘Diagnosis’ approach should be used.  Please explain your reasons.

We do not consider that making claimants wait for six months will ever be helpful. As the consultation points out, the delay will act as a disincentive to the majority of claimants who have genuine injuries. Deliberately delaying notification of claims could result in
·         third parties becoming untraceable as vehicles get sold on
·         more disputes over liability as the recollection of events becomes clouded with the passing of time
·         the potential for disputes arising from causation to complicate claims where an individual is involved in more than one accident during a six month period or where they develop over time symptoms which may not have been caused by the accident
·         an unnecessary delay in the injured claimant recovering non-PSLA losses
·         an increase in the number of claims incurred but not reported leading to greater uncertainty for underwriters.
It is for insurers to investigate and prosecute fraudulent claims, rather than to rely on the Diagnosis approach which will unfairly cause detriment to genuine claimants.

Question 9: If either option to tackle minor claims (see Part 2 of the consultation document) is pursued, please give your views on whether the ‘Prognosis’ approach should be used.
Please explain your reasons.

The options referred to in question 9 are unfair and unreasonable. Consequently it is irrelevant to express a view about the Prognosis approach being introduced to work in conjunction with the Part 2 options.

Question 10: Would the introduction of the ‘diagnosis’ model help to control the practice of claimants bringing their claim late in the limitation period?
Please explain your reasons and if you disagree, provide views on how the issue of late notified claims should be tackled.

Claimants are entitled to bring their claim at any time within a statutory limitation period and any claims reported within the statutory limitation period are not late.

Question 11: The tariff figures have been developed to meet the government’s objectives. Do you agree with the figures provided?  Please explain your reasons why along with any suggested figures and detail on how they were reached.

We do not agree with the fixed tariff figures which compare unfavourably against the JCG amounts. The tariffs proposed are between 22% and 82% of the JCG figures. Furthermore, we note that the JCG figures are based on edition 12 of the JCG which was introduced in December 2013. The current edition (edition 13) came into effect from September 2015. The reason for basing proposals on out of date guidelines needs to be explained and justified. The current JCG have been devised to deliver fair and proportionate levels of compensation for PSLA and we would support retaining this level of payments subject to regular future review.

Question 12: Should the circumstances where a discretionary uplift can be applied be contained within legislation or should the Judiciary be able to apply a discretionary uplift of up to 20% to the fixed compensation payments in exceptional circumstances?
Please explain your reasons why, along with what circumstances you might consider to be exceptional

This question is misconceived. The judiciary already has discretion within the JCG. The bands are currently wide and flexible.

Question 13: Should the small claims track limit be raised for all personal injury or limited to road traffic accident cases only?   Please explain your reasoning.

We do not support raising the small claims track limit. Claimants should be able to recover legal advice costs for claims that exceed £1,000. Any claim valued above this limit is sufficiently complex to merit legal representation being sought. Under no circumstances should the consultation be proposing measures beyond its remit i.e. “to crack down on minor, exaggerated and fraudulent soft tissue injury (‘whiplash’) claims stemming from road traffic accidents (RTAs)”.

Question 14: The small claims track limit for personal injury claims has not been raised for 25 years. The limit will therefore be raised to include claims with a pain, suffering and loss of amenity element worth up to £5,000. We would, however, welcome views from stakeholders on whether, why and to what level the small claims limit for personal injury claims should be increased to beyond £5,000.

Question 14 makes an assertion that the small claims court limit will be raised to £5,000 – regardless of the outcome of this (so-called) "consultation" process. This implies a misuse of the process. Respondents are then asked about our views on increasing the small claims court limit above £5,000. Inflation since 1991, when the current small claims limit was set, produces an index-linking factor of 2.01. We would contend that that a reasonable limit to take into account the effect of inflation would be around £2,000.  We are opposed to increasing the limit to £5,000 let alone any higher limit. 

Question 15: Please provide your views on any suggested improvements that could be made to provide further help to litigants in person using the Small Claims Track.

It is unclear whether the intention is that uncontested claims between £1,000 and £5,000 will continue to be dealt with through the personal injury claims portal (but without professional legal help), or whether the lower threshold for the portal will be aligned to a new small claims court limit of £5,000 with an alternative (new) system being developed for claims >£1,000<£5,000? The former seems more likely and is that scenario that we shall consider.

The portal was developed by the insurance industry with advice from legal professionals being expert claimant or defendant lawyers. Personal injury practitioners process claims forms in bulk and have office facilities at their disposal. Although the portal provides an efficient way of working for such professionals it was not designed with consumers in mind.

We consider the expectation that individuals would have the capacity, confidence or appetite to instigate claims through the portal following the trauma of an accident as unrealistic. We envisage genuine claimants viewing the portal as a significant barrier to bringing a claim.
Disabled individuals, those with learning difficulty, those for whom English is a second language and anyone falling the wrong side of the “digital divide” will be most adversely affected and therefore an equal opportunities impact assessment would need to be undertaken.

Use of the portal requires some understanding of the procedure rules and contemplates  that users will be aware of what they can claim for and have been sensibly informed of the level of compensation that is reasonable for their injury. Comparisons may be drawn with the employment tribunal claims service where self- represented applicants routinely expect large pay-outs of compensation which are far in excess of sums typically awarded.
An increase in litigants in person is another unwelcome consequence for claims handlers. Such Claimants inevitably take more time and are more challenging to deal with.

We are not aware of any work having been undertaken to assess how easily individuals are able to understand the required procedures and engage with the process, or whether they would cope with the time demanded. The Government does not appear to have based its views on consumer evidence (such as that gathered from focus groups or consumer questionnaires) to gauge how confident potential victims feel about pursuing claims in person. More work should be carried out to properly evaluate how well individuals are able to manage the process. We believe APIL have carried out a study on this point.

The expectation that individuals should conduct their own legal case is likely to add to levels of post-  accident stress suffered by claimants and it clearly creates an inequality of arms.
                                                                                                                                                               
If consumers are required to use the system, it will need to be simplified. Where individuals struggle with the procedure or have unrealistic expectations, claims are more likely to fall out of the portal, leading to proceedings being issued in more rather than fewer cases. It has already been shown in the Family Courts that litigants in person overwhelm the court system and this is against a background of court rooms being closed up and down the country.

Question 16: Do you think any specific measures should be put in place in relation to claims management companies and paid McKenzie friends operating in the PI sector?
Please explain your reasons why.

In our view unqualified and unregulated McKenzie Friends and unqualified CMCs should be banned.

We disagree with the Government's view that the majority of injured claimants are confident to be a litigant in person.

In 2013 the "Transport Committee's fourth report on the cost of motor insurance: whiplash" concluded that;
·         access to justice is likely to be impaired, particularly for people who do not feel
confident to represent themselves and
·         use of the small claims procedure could prove counterproductive in efforts to discourage fraudulent and exaggerated claims and
·         that the proposed reform could create new opportunities for claims management companies.
 It is widely held that CMCs are to blame for much mischief in the market. Cold-calling activities and mis-use of personal data has created an unpleasant environment for both consumers and insurers.  The idea that the Government should encourage the use of CMCs and paid McKenzie friends is abhorrent.

Question 17: Should the ban on pre-medical offers only apply to road traffic accident related soft tissue injuries?  Please explain your reasons why.


The ban on pre-medical offers is welcome and should apply to all injuries.
Defendants have already found it difficult to commercially justify defending a claim under the QOCS regime. When there is no prospect of recovering costs against an unsuccessful Claimant, a Defendant is encouraged to make offers of settlement even where there is a strong Defence in order to avoid incurring further costs.
In this scenario some claimants (encouraged by CMCs) have recognised that submitting even a speculative claim could result in an offer of settlement. Defendants will be faced with the difficult policy decision of either paying these claims, albeit at a nuisance value level, or incurring unrecoverable legal costs in defending them.
Pre-medical offers encourage the fraud and exaggeration that insurers complain about.

Question 18: Should there be any exemptions to the ban, if so, what should they be and why?

There should be no exemptions. Exemptions to a ban risk creating loop-holes. The ban should be absolute.

Question 19: How should the ban be enforced?  Please explain your reasoning.

The claims notification form could be designed to have a mandatory field to record key information from the medical report. The system could then prevent claims being progressed if the mandatory field is not fully completed. In addition we would suggest a regime of regulatory or criminal sanctions for parties breaching the ban.

Question 20: Should the Claims Notification Form be amended to include the source of referral of claim?   Please give reasons.

We support this measure as it will shine a light on pockets of fraudulent activity by CMCs.

Question 21: Should the Qualified One-way Costs Shifting provisions be amended so that a claimant is required to seek the court’s permission to discontinue less than 28 days before trial (Part 38.4 of CPR)?   Please state your reasons.

No, we do not agree that the Qualified One-way Costs Shifting provisions should be amended to require that a claimant is required to seek the court’s permission to discontinue less than 28 days before trial. The introduction of additional rules will catch out litigants in person. Consent or ex-parte applications will create additional work for the courts and presumably necessitate a fee which will result in an additional expense.

Defendants already have the right to apply to the court to recover costs from claimants where it has been established that a case is fraudulent. The process needs to be as simple as possible. Introducing additional obstacles for claimants creates complexity.

Question 22:
Which model for reform in the way credit hire agreements are dealt with in the future do you support?
a) First Party Model
b) Regulatory Model
c) Industry Code of Conduct
d) Competitive Offer Model
e) Other
Please provide supporting evidence/reasoning for your view (this can be based on either the models outlined above or alternative models not discussed here).

We prefer the 3rd option which thanks to the ABI GTA is basically what we already have.  There has been consensual tightening of the existing arrangements since it was launched and it provides both procedural and financial control.  In fact they have been no rate increases for some considerable time and earlier this year changes were introduced to reduce the late payment surcharges imposed on the compensator which resulted in dramatic cost savings for those efficient insurers able to pay promptly.

It should be made compulsory for all hire providers and all compensators to be signatories and for all hires to be provided under its control.  A further fillip for the insurer would be to insist the hire provider was FCA regulated and then both parties would be obliged to always act in the customer’s best interest.

Any cost savings anticipated by credit hire reforms might never actually be achieved due to the potential increase in motor insurance costs if the “First Party Model” was adopted. If the provision of a TRV was to become a mandatory cover under every motor insurance policy, insurers would be forced to increase premiums. It has been estimated (admittedly by the CHO) that the cost of a mobility solution from their own insurer could cost the average motorist up to £30.00 a year. So much for a reduction of between £3.00 and £10.00.

It is not clear whether under the “First Party Model”; the policyholder’s own insurer would be required to provide a like-for-like replacement, or whether the policyholder would be forced to accept a compromise on the type of TRV being offered? The existing model allows the credit hire company to provide a TRV on a like-for-like basis.

Many insurers are quite happy to pass details of their own non-fault policyholders to credit hire companies and receive significant referral fees for doing so. Referrals fees of £375.00+ are not uncommon and the insurers would lose a significant source of risk free income if the “Regulatory Model” was adopted and referral fees banned as a result.





The “Competitive Offer Model” is simply unworkable and even by the Government’s own admission “may lead to unnecessary stress and could result in poor customer satisfaction”. In reality, how quickly would the at fault insurer obtain its own quote and how long would the arguments between the insurer and the credit hire company over costs take to resolve, during which time the non-fault policyholder is left without their own (damaged) car or a suitable TRV.

It would take time to prepare the primary and secondary legislation required for the "Regulatory model" which may be challenging given Government's parliamentary and legislative priorities following the EU referendum. The Regulatory model is an affront to the free market economy and would be damaging to business models of insurers and the credit hire industry and it would ultimately impact on service delivery to drivers.

The Credit Hire Organisation has said that it will discuss the MOJ’s consultation paper at its annual conference (held on 24th November). It will be interesting to hear the results of these discussions and indeed, the CHO’s formal response to the MOJ.

Question 23: What (if any) further suggestions for reform would help the credit hire sector, in particular, to address the behaviours exhibited by participants in the market?
Please provide the factors that should be considered and why

We have no further suggestions to make.

Question 24: What would be the best way to improve the way consumers are educated with regards to securing appropriate credit hire vehicles?

Credit hire operators have in place robust controls to ensure that suitable vehicles are supplied. Consumers should be able to rely on the hirer's expertise which has built up around case precedent and within the framework of the ABI GTA.
Insurers should clearly explain in policy documentation what limits they wish to impose. Contract terms could allow insurers to limit their liability for third party costs – for example by imposing co-insurance or an excess or by expressing a weekly or per accident limit on the sum that can be claimed against the policy.  The at- fault driver would then become responsible directly for uninsured costs. 

Question 25: Do you think a system of early notification of claims should be introduced to England and Wales?   Please provide reasons and/or evidence in support of your view.

Comparisons to the notification requirements that operate in Nordic countries is inappropriate given the differences in the risk environment in those countries. Furthermore we are unsure of how sound the assertion that "late claims are arguably the claims most likely to be exaggerated…." (Paragraph 136) actually is and what evidence is available to support this statement. How long after the occurrence of an accident is a claim considered to be classified as a "late claim"?  The onus remains with the insurer to identify and challenge fraudulent claims.  Claimants should be able to report their claim within the statutory limitation period. Reducing the limitation period to one year for all motor personal injury claims would be an effective brake on CMCs  (and paid McKenzie friends) engaging in claims fishing activities and in its 2013-14 third session report (paragraph 40) "Cost of motor insurance: whiplash" the Transport Select Committee recommend that "the Government explain the rationale for the three-year limitation period and bring forward recommendations for reducing it".








Question 26: Please give your views on the option of requiring claimants to seek medical treatment within a set period of time and whether, if treatment is not sought within this time, the claim should be presumed to be ‘minor’.    Please explain your reasons.

It can be difficult for individuals to obtain medical appointments so that they may "wish away" symptoms days after being involved in an accident, in the hope of an early recovery from injury which is then not available. The introduction of a time limit during which treatment must be sought (but not necessarily obtained) would seem to be positive for genuinely injured claimants although what is reasonable must be carefully considered.   Further work should be carried out to study the behaviour of injured claimants and based on this to determine a reasonable window of opportunity following the accident during which medical help is sought before a time limit is set.

Question 27: Which of the options to tackle the developing issues in the rehabilitation sector do you agree with (select 1 or more from the list below)?
Option 1: Rehabilitation vouchers
Option 2: All rehabilitation arranged and paid for by the defendant
Option 3: No compensation payment made towards rehabilitation in low value claims
Option 4: MedCo to be expanded to include rehabilitation
Option 5: Introducing fixed recoverable damages for rehabilitation treatment
Other:
Please give your reasons.


It would appear that the Government’s main concern with rehabilitation is that it is providing claimant solicitors with an additional revenue stream and that referral to rehabilitation providers is driven by financial motives rather than a genuine attempt to ease the claimant’s pain and speed up the rate of recovery.

We do not acknowledge the idea that unnecessary treatment is being arranged in order to "increase the level of profit derived from a claim." Practitioners are bound by their own professional rules of conduct. There already is a Rehabilitation Code in force for many years agreed by both Claimant solicitors and Defendant Solicitors and insurers. This Code is working perfectly well already so there is no need to consider other options.

Furthermore we would be interested to explore any evidence to support the accusation that rehabilitation arrangements are conducive to fraud.
We do not agree that it is correct to raise rehabilitation as a problem that requires remedy, or that it is contributing in any meaningful way to rising motor insurance costs. In our view there is no inherent problem with the provision of rehabilitation to injured claimants and whilst there might be some instances of financial gain being the primary motive for arranging treatment, the vast majority of claimants who attend physiotherapy are genuine individuals who receive a meaningful benefit from the rehabilitation treatment that is arranged for them by the claimant solicitor or CMC.

Question 28: Do you have any other suggestions which would help prevent potential exaggerated or fraudulent rehabilitation claims?

No – We are not aware of any issue with fraudulent or exaggerated claims.












Question 29: Do you agree or disagree that the government explore the further option of restricting the recoverability of disbursements, e.g. for medical reports?
Please explain your reasons.

We disagree that the Government should explore further options for restricting disbursements. Medical reports are vital to restrict or prevent fraudulent or exaggerated claims. Any restriction on the recovery of costs will negatively impact on the price consumers pay for before- the- event legal expenses insurance.

Question 30: A new scheme based on the ‘Barème’ approach, could be integrated with the new reforms to remove compensation from minor road traffic accident related soft tissue injury claims and introduce a fixed tariff of compensation for all other road traffic accident related soft tissue injury claims. What are the advantages and disadvantages of such a scheme?
Please give reasons for your answer and state which elements, if any, should be considered in its development

In our view it is completely unnecessary to consider a fundamentally different system for calculating damages for injury while a perfectly adequate system currently exists and is in use i.e. the JCG.

Question 31: Please provide details of any other suggestions where further government reform could help control the costs of civil litigation.










































Impact Assessment Questions
1 Options

Question 1.1: Do you agree with the range of assumptions made in relation to Option 1.1?
If not, please explain why, preferably with supporting evidence.

Question 1.2: Do you agree with the range of assumptions made in relation to Option 1.2? If not, please explain why, preferably with supporting evidence.

For both options we believe that claimants may also face higher BTE premiums as a result of increased claims costs. Our provisional (as further research is required) view is that this would be in the region of £10 + IPT per vehicle.  

Question 1.3: Do you agree with the range of assumptions made in relation to Option 2? If not, please explain why, preferably with supporting evidence.

For both options (excluding non-RTA), we also provisionally (as further research is required) believe BTE claims costs would increase, leading to premiums increasing by a further £10 + IPT per vehicle.

Question 1.4: Do you agree with the range of assumptions made in relation to Option 3? If not, please explain why, preferably with supporting evidence.

We disagree with the data (around 60% of CN claims had a total settlement of less than £10,000) supplied by the NHS Litigation Authority. Our own extensive experience indicates that this figure should be no more than 30% and indeed we question why a limit of £10,000 is being used when the Consultation proposal relates to £5,000, where our experience shows that no more than 10% of CN claims would qualify.
  
We have some doubts as to the main assumptions used for BTE and non-BTE RTA claimants. Our own extensive experience of BTE buying behaviour throughout the world concludes that there is a high demand elasticity as policyholders respond to price increases. We estimate that given that prices may increase by 50%, demand will reduce by 20%, and not remain the same as assumed. This effectively reduces the assumed 70% of RTA claimants to around 56% with the residual 14% transferring to other forms of representation (litigants in person, ATE or Union). This would then make such a cohort 44% of all claimants with corresponding increases in LiP’s and others who pay for legal representation.

We do not necessarily agree with the assumption that there would be a reduction from 29% to 19% for those without BTE insurance. Indeed, even allowing for an increase in LiP’s which is far from desirable, we still think that the number will increase from 29%.

It is naïve to think that impact of BTE price increases are considered secondary when the majority of motorists purchase such cover at present. A combined view should be adopted instead.

We question how a BTE premium increase of £9 per annum has been calculated based on £247m increased costs (which in itself is not explained). The ABI is quoted as insuring 23m vehicles of which 70% are assumed to have BTE, producing 16m BTE vehicles. £247m divided by 16m vehicles produces an additional premium of £15, not £9 per vehicle.         


Question 1.5: Do you agree with the range of assumptions made in relation to Option 4? If not, please explain why, preferably with supporting evidence.

Unfortunately, we have no information at this level, though we suspect savings to BTE insurers will be minimal (ie costs will be similar to Option 3).




Question 1.6: Do you agree with the range of assumptions made in relation to Option 5.1? If not, please explain why, preferably with supporting evidence.


Please see answers to earlier questions.

Question 1.7: Do you agree with the range of assumptions made in relation to Option 5.2?
If not, please explain why, preferably with supporting evidence.


Please see answers to earlier questions.



2 Pre medical offers

Question 2.1: From your experience in personal injury claims please provide further information on the issues raised on pre-medical offers in the impact assessment.  In particular please provide any information you have on the:

i.     current and historical average volume of claims;

ii.    proportion of claims with legal representation, and separated by type of legal representation (for example the proportion of claimants with BTE funded legal representation, the proportion of claimants with non-BTE legal representation and the proportion of claimants that are litigants in person);

iii.    proportion of claims with special damages (and separated by type of special damages);

iv current and historical average settlements (total settlement, PSLA element, and special damages element, separately), stratified by claimant injury durations, if possible;

v.    current and historical average volume of late claims/how long after the accident the offer is made/accepted and the source/origin of the offers (i.e. offers made by insurer, solicitor etc.);

vi likely change to the above as a result of the governments intentions detailed in the consultation; and

vii above for road traffic accidents claims, employer liability claims, public liability claims, and clinical negligence claims.


We are unable to provide this information due to the time deadline of responding to this Consultation .























3 Non RTA Personal Injury claims
i)          Employers Liability
Question 3.1: From your experience in personal injury claims please provide further information on the issues raised on employers’ liability claims in the impact assessment. In particular please provide any information you have on the:

i.     current and historical average volume and proportion of claimants with BTE insurance;

ii.    proportion of claims with legal representation, and separated by type of legal representation (for example the proportion of claimants with BTE funded legal representation, the proportion of claimants with non-BTE legal representation and the proportion of claimants that are litigants in person);

iii.    proportion of claims with special damages (and separated by type of special damages);

iv current and historical average settlements (total settlement, PSLA element, and special damages element, separately), stratified by claimant injury durations, if possible;

v.    current and historical average volume of late claims/how long after the accident the claim is issued

vi proportion of market that has private insurance and all of the above for claims that currently have medical reports, and currently are pre-medical offers; and

vii likely change to the above as a result of the governments intentions detailed in the consultation.

We are unable to provide this information due to the time deadline of responding to this Consultation.




ii)        Public Liability

Question 3.2: From your experience in personal injury claims please provide further information on the issues raised on public liability claims in the impact assessment. In particular please provide any information you have on the:

i.     current and historical average volume and proportion of claimants with BTE insurance;

ii.    proportion of claims with legal representation, and separated by type of legal representation (for example the proportion of claimants with BTE funded legal representation, the proportion of claimants with non-BTE legal representation and the proportion of claimants that are litigants in person);

iii.    proportion of claims with special damages (and separated by type of special damages);

iv current and historical average settlements (total settlement, PSLA element, and special damages element, separately), stratified by claimant injury durations, if possible;

v.    current and historical average volume of late claims/how long after the accident the claim is issued

vi proportion of market that has private insurance and all of the above for claims that currently have medical reports, and currently are pre-medical offers; and

vii likely change to the above as a result of the governments intentions detailed in the consultation.






We are unable to provide this information due to the time deadline of responding to this Consultation




iii Clinical Negligence

Question 3.3: From your experience in personal injury claims please provide further information on the issues raised on low value clinical negligence claims in the impact assessment. In particular please provide any information you have on the:

i.     current and historical average volume and proportion of claimants with BTE insurance;

ii.    proportion of claims with legal representation, and separated by type of legal representation (for example the proportion of claimants with BTE funded legal representation, the proportion of claimants with non-BTE legal representation and the proportion of claimants that are litigants in person);

iii.    proportion of claims with special damages (and separated by type of special damages);

iv current and historical average settlements (total settlement, PSLA element, and special damages element, separately), stratified by claimant injury durations, if possible;

v.    current and historical average volume of late claims/how long after the accident the claim is issued

vi proportion of market that has private insurance and all of the above for claims that currently have medical reports, and currently are pre-medical offers; and

vii likely change to the above as a result of the governments intentions detailed in the consultation.

We are unable to provide this information due to the time deadline of responding to this Consultation


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4 BTE

Question 4.1: From your experience in personal injury claims please provide further information on the issues raised on BTE insurance in the impact assessment. In particular information please provide any information you have on the:

i.     current and historical average level of take up for RTA claims currently with medical reports;

ii.    current and historical average costs of BTE products; and
iii.    likely change to the above as a result of the governments intentions detailed in the consultation.

i.   Not known
ii.  Motor BTE average premium has remained static at approximately £28+ IPT but ranges between £25 to £31 + IPT
Family BTE averages at approximately £25 per policy but typically varies between £15 to        £36 +IPT

iii.  Difficult to predict with any certainty but our provisional view is that Motor BTE will increase by approximately £15 + IPT and Family BTE will increase by approximately £5 + IPT








5 Impact on NHS

Question 5.1: Do you have any information on the injury characteristics of individuals who seek treatment from the NHS with regard to a personal injury claims split by inpatient, outpatient and those requiring an ambulance called out. If so, please provide details such as type of treatment, injury length etc.

We have no information

6 Proportion of insurers saving passed onto consumers

Question 6.1: We would also welcome views from respondents on the assumption in the IA
that 85% of insurers savings would be passed onto consumers.

Firstly, we struggle to understand how Insurers will be able to discretely identify the savings from these reforms in isolation from all the other many variables that affect the pricing of premiums. We believe any savings will be “lost” in the various moving parts that make up pricing.
Secondly, we very much doubt whether Insurers will be true to their word given their poor experience of honouring past commitments. The insurance industry promised savings of £90 per motorist pre-LASPOA yet premiums have since risen by 4% despite 6% fewer claims. The Transport Committee recommended that the Government explain how it will monitor whether or not motor insurers honour their commitment to ensure savings that result from legal reforms are passed through to consumers in the form of lower premiums. Fully recognising the dysfunctional and opaque nature of the motor insurance market the Committee called on insurers to be more transparent about financial and other links in the service chain. Of some concern is the recent Government acknowledgment that it is not going to force insurance companies to pass on any savings.
Thirdly, even if such savings could be determined, we fail to understand why 100% savings cannot be achieved against the assumption of only 85%, leaving Insurers to further profit from victims’ misfortunes. Contrast this to the assumption that 100% of costs incurred by BTE insurers will be passed onto customers.

7 Equalities/Protected Characteristics

Question 7.1: Do you consider that any of these proposals will affect people with protected equality characteristics? If so, please give details.

These proposals will reduce the availability and increase the cost to injured victims of ATE insurance. ATE policyholders have a high proportion of low socio-economic citizens who cannot afford the alternative BTE products sold as add-ons to Motor and Household insurance products. It will be particularly damaging for non-RTA injury victims where claims are far more complex and variable.    

Question 7.2: Do you consider that any of these proposals impact on the duty to have due regard to the need to advance equality of opportunity, by minimising disadvantages due to their protected characteristics? If so, please give details.

Please see the answer above in 7.1. These proposals will result in achieving the exact opposite of advancing equality of opportunity for victims who are currently vulnerable and the most disadvantaged part of society.







Question 7.3: Do you have any data to support or disagree with any of the proposals which you would like the government to consider as part of this consultation?

We assume this question is not limited to Equalities/Protected Characteristics.

We believe the findings of the Transport Committee on the Cost of motor insurance: whiplash in 2013-14 should form the basis of this consultation. In particular, we would point out the following conclusions from that report:

 I.          The Committee was not persuaded from the evidence available that the UK is the Whiplash capital of the world. ARAG has offices in 17 countries and knows from experience that any comparison of claims frequencies must be based on road and population density. The fact that the UK has 79 per cent more vehicles per kilometre than any other EU country and the most congested roads causes understandably more collisions and claims than elsewhere (certainly more than Finland which is held up as a credible comparator in this Consultation).

II.          The impact of LASPOA has had a significant effect on the number of Motor personal injury claims based on CRU data. This shows there has been a reduction in claims since LASPOA which should be compared with the likely increase that would have happened but for LASPOA. The chart below shows the linear trend line progression of claims since 2013 to portray what might have happened had LASPOA not been introduced. This shows that approximately 21% fewer claims
         have occurred post-LASPOA, despite more vehicle traffic increasing.      


This reduction should not go unnoticed and confirms that measures have already been introduced to reduce such claims to already minimum levels. There is no need to introduce further draconian measures as matters are now in a steady state and under control.
             III.            As injury symptoms emerge relatively quickly the Transport Committee recommended the Government explain why they were unresponsive to changing the limitation period for road traffic claims below £10,000 from three years to one. ARAG believes this option should be considered further.



            IV.            Not only do we know that least well off drivers can be tempted to decline BTE legal expenses cover in order to reduce their premium, the Transport Committee was impressed by our argument that expecting individuals to have the capacity, confidence or appetite to instigate claims through the RTA portal is unrealistic. They believed “that access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves in what will seem to some to be a complex and intimidating process”. They further noted that “insurers will use legal professionals to contest claim, which will add to this problem” producing inequality of arms.
Our evidence also raised concern about small claims track procedures having the potential to increase the risk of fraud. The Transport Committee noted that procedural implications “could prove counter-productive in efforts to discourage fraudulent and exaggerated claims.” 
The Transport Committee recommended no change to the small claims threshold until the MOJ had assessed the impact of the Portal.
              V.             The Transport Committee took the view that access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves. 

8 Small and Micro Business Assessment

Question 8.1: Is your business a small, micro or medium sized business which undertakes work in England and Wales in support of personal injury claims road traffic accidents, employer’s liability, public liability or clinical negligence claims?

ARAG is a medium sized business in the UK which provides BTE and ATE insurance for all the above types of claims in England and Wales.

Question 8.2: What is your assessment of the impact on your business from the reforms included in this consultation?

Where possible please provide evidence in support of your comments.

ARAG believes there will be a shift of business from ATE to BTE should the small claims court limit increase to £5,000 with an overall provisional negative impact on sales of approximately 10%. This will lead to a reduction in our workforce of a similar proportion.

Should PSLA compensation be removed or limited, ARAG provisionally forecasts a decrease in sales of up to 90% for Motor risks and 60% for non-Motor PI risks, resulting in an overall sales reduction of approximately 25% with corresponding decrease in staff numbers.   



Reforming the Soft Tissue Injury (whiplash) Claims Process
A consultation on arrangements concerning personal injury claims in England and Wales

About you

Please use this section to tell us about yourself

Full name
Mr Tony Buss
Job title or capacity in which you are responding to this consultation exercise (e.g. member of the public etc.)
Managing Director, ARAG plc.
Date

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(if applicable):
ARAG plc.
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Legal expenses insurance provider acting on behalf of claimants.
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9 Whiteladies Road


Clifton, Bristol
Postcode
BS8 1NN
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